The 'Provision for Bad Debts' is created by: MCQ with Answer and Explanation

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The 'Provision for Bad Debts' is created by:

A. Debiting Sales Account

B. Crediting Cash Account

C. Debiting Profit & Loss Account and crediting Provision for Bad Debts

D. Debiting Debtors Account

Answer: Option C

Solution (By JKSSB Mock Tests)

The adjusting entry: P&L A/c Dr. To Provision for Bad Debts.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

A Suspense Account is generally closed when:

A. The financial year ends

B. All errors causing the trial balance difference are rectified

C. The auditor approves it

D. The balance sheet is signed

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Correct Answer: Option B

Explanation:
The Suspense Account exists only as a temporary fix. Once all one-sided errors are found and rectified, its balance becomes zero.

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Question #2

The 'RCM' (Reverse Charge Mechanism) under GST applies to:

A. Only services

B. All supplies

C. Only goods

D. Specified categories of supplies and registered persons

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Correct Answer: Option D

Explanation:
RCM is applicable to notified categories of goods/services and where supplier is unregistered to registered recipient.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #3

Which of the following is a direct tax levied by the Union Government?

A. Sales tax

B. Entertainment tax

C. Income tax

D. Excise duty on alcohol

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Correct Answer: Option C

Explanation:
Income tax is a direct tax. Excise on alcohol is state subject. Sales tax/VAT is state. Entertainment tax is local.

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